1. The Object and Approach of This Book
A Theory of Regulation
Typical Justihcations for Regulation
The Control of Monopoly Power
The Traditional Economic Rationale for Regulation. Objections (o the Traditional Economic Rationale. Additional Bases for Regulation.
Rent Control or "Excess Profits"
What Is a Rent? The Rationale for Regulation. Compensating for Spillovers (Externalities)
What Are Spillovers? The Classical Rationale for Regulation.
Objections to the Classical Rationale. A Caveat. Inadequate Information
The Classical Rationale for Regulation. Criticisrns of the Rationale.
Excessive Competition: The Empy Box
Historical Use. Current Use.
The Mixture of Rationales
2 Cost-of-Service Ratemaking
Determrning the Rate Base. Determining the Rate of Return.
Efficiency. The Test Year." Rate Structure.
3 Historically Based Price Regulation
Categorization. Cost-of-Service Ratemaking. Allocaiion. Enforcement. New Investment.
4 Aliocation under a Publlc Interest Standard
What Is to Be Allocated? The Selection Process. The Renewal Process.
5 Standard Setting
The Procedural Background. The Standard-Selting Process.
Problems Inherent in the Process
Information. Enforcement. Anticompetitive Effects. Judicial Review.
6 Historically Based Allocatlon
The Need for Exceptions
The Exception Process
7 Individualized Screening
The Food Additive Screening System
Problems with This Form of Regulation
Developing a Test for Risk. The Use of Experis. The Effort to be Comprehensive: Calculating and Weighing Benefits. Varying Standards of Selection.
8 Alternatives to Classical Regulation
Unregulated Markets Policed by Antitrust
The Creation of Marketable Property Rights
Changes in Liability Rules
9 General Guidelines for Policy Makers
II Appropriate Solutions
10 Match and Mismatch
11 Mismatch: Excessive Competition and Airline Regulation
Harmful Effects of Regulation
Mismatch as Cause
Price Reguiation. Route Awards. Efficiency. The Effort to
An Alternative to Classical Regulation
12 Mismatch: Excessive Competition and the Trucking lndustry
The Industry and Regulation
The Effects of Regulation
Alternatives to Classical Regulation
13 Mismatch: Rent Control and Natural Gas Field Prices
The Mismatch and the Shortage
Firm-by-Firm Cost-of-Service Ratemaking. Areawide Cost-of-
The Mismatch and Natural Gas Aliocation
Standard Setting. Pubiic Interesi Aliocation. Negotiation.
14 Partial Mismatch: Spillovers and Environmental Poilution
The Problems of Standard Setting
Incentive-Based Systems: Taxes and Marketable Rights
In Principie. A More Practicai Comparison.
15 Problems of a Possible Match: Natural Monopoly and Telecom-
The Characienstics of the Longline Problem
The Industry and the Service. Regulation and Joint Costs. The
Entry of Competition into Long-Distance Telecommunications.
The FCC's Response to the Problem
Above MCI. Specialized Common Carriers (SCCs). AT&T's Competitive Response: Special Rates. Docket 18128. Expanding the Area of Conipetition.
The Basic Choices
III Practical Reform
16 From Candidate to Reform
The Elements of Implementation
The Kennedy Hearings
Preparation. The Actual Hearings. Conclusion
17 Generic Approaches to Regulatory Reform
Fairness and Efficiency.Legit,macy.
Managerial Proposais. Superv isory Proposais. New Institutions.
Encouraging Substantive Reform
Impaci Statements. Encouragi ng Step-by- Step Reform.
Appendix 1 The Regulatory Agencies
Appendix 2 A Note on Administrative Law